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VAT in the Digital Era
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A value-added tax (VAT) as a tax on final consumption has been adopted by over 170 jurisdictions. Most jurisdictions levying a VAT agree that the tax should only apply where goods or services are finally consumed, but there are divergent views on this location, particularly in the case of cross-border digital supplies. This can cause double taxation or unintended double non-taxation, resulting in distortions and revenue losses. Unilateral responses to VAT challenges of cross-border digital supplies have created more diversity than harmonization, as the book shows. Recommendations by the Organisation for Economic Co-operation and Development have been the only international effort to coordinate VAT rules on cross-border digital supplies, but international consistency has not yet been achieved. This book considers unilateral and multilateral options for the creation of an internationally coordinated framework on VAT as the basis to address conceptual and administrative challenges posed by a rapidly evolving international economy. It explores the implications of rapid digitalization of the economy on VAT systems across borders and possible approaches to improving consistency in applying destination-based taxation to cross-border digital supplies and discusses the achievability and potential benefits of a multilateral solution to international VAT.
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